On June 30, the end of the first year of operations, Johnson Industries, Inc., manufactured 3,700 units and sold 3,200 units. The following income statement was prepared, based on the variable costing concept:
Johnson Industries, Inc. Variable Costing Income Statement For the Year Ended June 30, 2016 |
||||
Sales | $1,728,000 | |||
Variable cost of goods sold: | ||||
Variable cost of goods manufactured | $958,300 | |||
Less inventory, June 30 | 129,500 | |||
Variable cost of goods sold | 828,800 | |||
Manufacturing margin | $899,200 | |||
Variable selling and administrative expenses | 208,000 | |||
Contribution margin | $691,200 | |||
Fixed costs: | ||||
Fixed manufacturing costs | $440,300 | |||
Fixed selling and administrative expenses | 137,600 | 577,900 | ||
Income from operations | $113,300 |
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Variable costing | $ |
Absorption costing | $ |
Solution a:
Units cost of goods manufactured (Variable costing) = Variable cost of goods Manufactured / Units Manufactured
= $958300 / 3700 = $259
Solution b:
Units cost of goods manufactured (Absorption costing) = (Variable cost of goods Manufactured + Fixed Manufacturing Cost) / units manufactured
= ($958300 + $440300) / 3700 = $378
On June 30, the end of the first year of operations, Johnson Industries, Inc., manufactured 3,700...
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